State's power rates might make electric cars costly choice

By Tiffany Hsu Los Angeles Times

Posted:
01/19/2011 09:42:16 AM PST

Updated:
01/20/2011 03:26:07 PM PST

Click photo to enlarge

The electric plug for the new Ford Focus Electric is on the left front side of the car. The Focus and many other vehicles were on display during the Ford press conference at Cobo Arena at the 2011 North American International Auto Show held at Cobo Center in Detroit, Michigan, Monday, January 10, 2011. (Eric Seals/Detroit Free Press/MCT)

LOS ANGELES -- Californians may end up paying the highest electricity rates in the country to charge up their electric vehicles, a new study says.

The state's tiered rate system, in which customers are charged higher rates as they use more electricity, could make plug-in hybrid and battery-powered vehicles more costly to own, according to a Purdue University study.

The study was unveiled as the first of the electric and plug-in hybrid vehicles are reaching consumers. Two vehicles, the all-electric Nissan Leaf and the plug-in hybrid Chevrolet Volt, started being delivered to their first customers last month.

Electric-car makers and utilities said most owners will probably charge their vehicles at night when the rates are lower.

But because of the tiered rate system, their electricity bills will still probably be high. California households pay steeper rates for their electricity compared with other states -- about 35 percent more than the national average, according to the study.

"The tiered system was put in because California wanted to be green and discourage electricity consumption," Wally Tyner, an energy economist and lead researcher on the study, said. "The unintended consequence is that it also discourages electric vehicles."

A plug-in hybrid Volt would increase the average household's electrical usage 60 percent, the study said. Although the study didn't explicitly examine all-electric vehicles such as the Leaf, "the same principle would apply," Tyner said.

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Both the hybrid Toyota Prius, which doesn't need an outlet to charge, and the gas-powered Chevrolet Cobalt are more cost-effective in California, the study found. Oil prices would have to rise from less than $100 a barrel now to between $171 and $254 to make the Volt as economical, even after factoring in thousands of dollars in government incentives.

"Once past the highly motivated early adopters who don't care how much they pay to run their cars, charging costs in California will make it hard to go to market with the general consumer," Tyner said.

A more economical system, he said, would be to use flat electricity rates, such as Indiana's rate of 8 cents per kilowatt-hour. California's average rate is 14.4 cents per kilowatt-hour.

Short of scrapping tiered pricing, Tyner said utilities in California should consider installing flat-rate meters for electric cars that are billed separately from the rest of the household.

But some power companies said they are already experimenting with different rate formulas to help boost electric car use. Southern California Edison offers three programs for electric vehicle owners, said Ed Kjaer, director of electric transportation at the utility.

One of them involves having a separate, lower rate for the electric car.

The Purdue findings, which took more than a year to compile, were published in the Energy Policy journal.